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To: Bull RidaH who wrote (36743)	1/17/2020 1:43:51 PM
From: robert b furman	Respond to of 41411

Hi Bull, I know that is the spin going on. I see gas and oil still being very much in demand as the emerging markets continue to grow their middle class. A class that will want cheap transportation vs the expensive and subsidized EV alternatives. XOM is selling off a lot of world wide assets and concentrating on cheap energy as a source for downstream gas sales and chemical and plastics production. With Guyana for deep sea oil, Mozambique for cheap natural gas and Permian for both along with the Permian including infrastructure - pipelines and export terminals from Corpus Christi and Houston ship channel,they're setting up for a strong continuous cash flow. XOM has such low debt, that they can do both dividends and Capex by embracing Aaa credit inexpensive money THEIR COST IS CHEAPER THAN THE US GOVERNMENT. Their debt to capital is .12 with .30 being the industry norm and their net debt to ebitda is is a super low 1.281 assets sales of which a lot is there for review on a world wide basis. S&P rates them Aaa and Moody's AA+ I may well be wrong here, but the green investment valuations on wind and solar renewables are on shaky ground when and if the government subsidies go away. The hype behind EV (as so well inflated by Tesla's valuation being greater than F and GM combined on a small fraction of the numbers of cars produced) will lose the wind in its sails when urban areas find market saturation of EV's and rural areas still do not find EV" reliable from a range perspective. When the rebate credits seize to exist, those hyped up momentum stories will fall down to normal valuations if not lower. David remember back that the internet was going to be the next creative destruction that would completely change the world. That too was overhyped and came crashing down. NOT that they would not evolve and grow. But the time it would take for the maturity of those companies was hyped as as far too imminent. It has after all been 20 years from the Dot.Com collapse. Yes Amazon has done well. E commerce has grown, but it is less than 15-20 % of all commerce. Bottom line these major innovations take time. IT ALWAYS TAKES LONGER ! When the hype comes out of the renewable are cheaper(with subsidies only) and EV's are going to make the internal combustion engine obsolete (not in China or India where cheap is better i.e coal vs gas electricity) I'm betting good ole XOM will still have gas stations pipelines and chemical/plastic plants. They'll be margin leaders as they'll be located at the cheapest sources of fossil fuel and the demand for such products will still be growing when I'm pushing up Daisies. I know that flies in the face of the current popular thinking. That's why one can get 5.45% yield on XOM's safe (according to simply safe dividends rating - down from very safe of late) $3.48 dividend which has been increasing ever since. seekingalpha.com Exxon plans with $60.00 oil and their cost of $20.00 from the permian and Guyana. With their Capex expansions they expect to double their free cash flow by 2025. That'll more than keep my dividend safe and growing. In the peak of oils collapse (2016) XOM increased their dividend. I suspect it will be at a slower rate in the future, but still very safe. EXXON has stated the dividend is safe and growing if the price of oil stays above $40.00. It's trading at 58.40 as I type. That's a nice cushion of safety. At $55.00 crude, they can keep funding their growth initiative without surpassing 25% debt to capital 30 is the standard benchmark for the oil industry. XOM has very nicely added to their proven reserves and reduced their costs of the oil. seekingalpha.com The market has been hyped about renewables and EV's. That's where the bubble is and XOM is where the assets and great value is. Could it get lower you bet. Will it keep paying its dividend - yes I think so Will its products be in demand over the long term - yes at least in emerging markets and no one is more global than XOM. According to the US Energy Information agency, global oil demand will continue to grow at a slowing rate through 2040. Now it's true that all models are probabilistic in nature and global oil demand forecasts vary widely depending on the source. (Source: BP) The most bearish forecast is from the International Energy Agency, under the scenario where the world fully achieves the Paris climate accord goals. Thus far no major nation has even made significant promises toward that effect but it could result in 50 million bpd lower global demand if it happened. Fortunately for Exxon and all US energy companies, even a 3% annual decline in oil production from legacy fields (it's closer to 6% in reality) would still mean that production would be more than 30 million bpd less than demand under that most bearish IEA forecast. According to the EIA, 80% of new capex spending by oil majors through 2040 (totaling over $4 trillion) is required just to replace falling production which is a natural part of this industry. This is why we, Morningstar and BAC are bullish on Exxon Mobil's plan to invest up to $226 billion into new production growth through 2025. Other oil companies are focusing on spending less and buying back stock more. But ultimately Exxon Mobil's focus on high margin growth projects could put it in the driver's seat when it comes to generating safe and growing dividends for years and probably decades to come. Today XOM is trading below $69.00. My Puts I sold back in the Dec 2018 generated $4.11premium on 5000 shares. That puts me at a net cost of 65.89 well below the 67 support area. Meanwhile on the package of puts sold, I'll yield 5.28%, waiting for XOM Capex plans to start returning positive cash flow and greate profits. It.s a big fat blue chip that has the balance sheet to grow when things are cheap and offcycle for oil. Some value it at $96.00 to $101.00, that's a fat discount and I don't think it is a value trap like some do claim. As always I value your warning and Thanks for presenting it. Heck I may be all wet, but this is one I've had my eye on for a long time and it looks like a good time to average down. The long time sale of puts over a year ago is giving me a safety cushion - hope like heck I don't need to use it. LOL Thanks Plonkster! May the BULL rid on!! By the way I liked your charts - I think you're on the money! Bob

To: Bull RidaH who wrote (36743)

1/18/2020 11:38:16 AM

From: robert b furman

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Read Replies (1) | Respond to of 41411

HI Bull Ridah,

I am posting on a subject that you brought up for me to consider, the idea of fossil fuels not having a future as they become displaced by renewables and subsequently possible "value traps".

That very idea is very much in in vogue these days.

I propose this subject as food for thought.

I believe it has gained so much traction, the result of a lot of mistruths regarding renewables.

In every case where countries have committed billions in currencies to the "renewable energy' for green purposes, electricity costs have skyrocketed. In Germany's case (which is perhaps the poster child for huge green commitments) ,electrical rates have tripled and the costs have landed squarely on the poor, as industry is getting rebates to subsidize the cost in an effort to keep their national industries competitive.

Bottom line - going green is expensive and is being sadly misrepresented!

Below I'll post some links that make sense of the misinformation we are all being exposed to.

First and Foremost I present this data thinking that in the long run, the fossil fuel companies will prevail and become once again national treasures - particularly within the U.S..

We are blessed with shale deposits for oil. Along with fracing for that oil, comes very valuable byproducts of liquid natural gas(methane, ethane to name a few) and natural gas. All of which are source products for plastics and chemicals.

All of these are huge future export products are just now beginning to be shipped to the needy world, as long term infrastructure projects are beginning to add to our export capabilities/realities.

1) Going green is expensive :
politico.eu

instituteforenergyresearch.org

2)Going green has unintended consequences besides price:

BBC: Green Energy Boom Forcing Increased Production of a Potent Greenhouse Gas
Eric Worrall September 13, 2019

Sulfur Hexafluoride, a potent Greenhouse Gas Guest chuckle by Eric Worrall

The BBC claims the potent greenhouse gas sulfur hexafluoride leaking from EU wind turbines and other renewable electricity infrastructure components produces the global warming equivalent of putting an extra million new cars on the road.

Climate change: Electrical industry’s ‘dirty secret’ boosts warming
By Matt McGrath
Environment correspondent

It’s the most powerful greenhouse gas known to humanity, and emissions have risen rapidly in recent years, the BBC has learned.

Sulphur hexafluoride, or SF6, is widely used in the electrical industry to prevent short circuits and accidents.

But leaks of the little-known gas in the UK and the rest of the EU in 2017 were the equivalent of putting an extra 1.3 million cars on the road.

Levels are rising as an unintended consequence of the green energy boom.

Cheap and non-flammable, SF6 is a colourless, odourless, synthetic gas. It makes a hugely effective insulating material for medium and high-voltage electrical installations.

It is widely used across the industry, from large power stations to wind turbines to electrical sub-stations in towns and cities. It prevents electrical accidents and fires.

However, the significant downside to using the gas is that it has the highest global warming potential of any known substance. It is 23,500 times more warming than carbon dioxide (CO2).

3)The bottom line - Fossil fuels are here to stay for at least as long as we boomers are alive:

Message 32508270

4) Natural gas works:

naturalgasnow.org

We are being bombarded by a lot of mistruths and the environmental rebates are hiding the true cost of going green with renewables.

Sooner or later the best solution will be coupled with what works at the lowest price. This will be the only true global answer. Sadly in between that final solution, a lot of expensive and detrimental techniques will have been placed into permanency.

All of this barrage of mistruths and and refusal to acknowledge what is really working, has without a doubt tainted the valuations of some very solid "fortress like balance sheet" vertically integrated oil explration companies (XOM and CVX).

Given time, the truth of what is effective will come out.

The margins of these legacy oil and gas exploration companies will experience large differential headwinds:

1) costs of fracing and ultra deep sea drilling have been substantially reduced by the "peak oil myth" being discredited.
2) the alternative green solutions have been falsely represented to be cheap - this will allow the more effective fossil fuel solutions a substantial "overhead margin expansion to their alternative competition"

All of the above will be a long term transition, as the real solutions prove out and the true costs become more clearly recognized.

The tainting of fossil fuel valuations is a generational value opportunity!

In these lofty overall market valuations, there are bubble like valuations being built into "renewable" green solutions and EV vehicles.

I remember well how ubiquitous the internet was to be, and twenty years later it has transformed much.

It was not without a brutaL COLLAPSE. A collapse that wiped out those story stocks that had no profits.

During the distribution top of the Dot.com era (1999) I remember Microsoft was a laggard as they had no "solution to an internet browser"
.
Microsoft is now one of the few AAA credit ranked corporations and their dividend has never been higher and market capitalization has never been higher. :https://www.screencast.com/t/l97XqOM5zUp. Although Mr. Softee's dividend is relatively new since the dot.com era its stock has gone up a whopping 46 bagger.

Getting paid 5.25% by owning XOM or CVX to wait for the real valuation to surface isn't a bad way to get rich!

When the inevitable corrective decline of the market besieges us, I'll want my money in fossil fuel stocks that will pay a wonderful dividend (5% to 6%) - and oh yes by the way I'll be short these overstuffed balloon "Green Companies".

I rest my case with this tidbit :

(GRAPHIC: U.S. automakers' market cap history - here)

Fueled by a surprise third-quarter profit, progress at a new factory in China and better-than-expected car deliveries in the fourth quarter, Tesla’s stock has more than doubled in the past three months.

Underscoring investors’ confidence in Musk and his company’s future growth, its market capitalization has outpaced its U.S. rivals, even as their businesses dwarf Tesla’s. GM and Ford each delivered more than 2 million vehicles in the United States last year, compared with Tesla’s worldwide deliveries of 367,500 vehicles.

(GRAPHIC: U.S. automakers' expected sales - here)